| Kippreport.com

TAKING STOCK: Time for a unification?

June 10, 2012 5:59 by Eva Fernandes

As the summer draws close, so too does the potential ‘emerging market’ upgrade from MSCI. Last summer, after much speculative hullabaloo, the MSCI ‘postponed’ making a decision by six months, before deciding against the upgrade. With the way things are going, I wouldn’t be too surprised if we see a repeat of their actions this summer.

Why? Perhaps, it is best to review the performance of the stock markets here in the UAE. According to the Dubai Financial Market, last year Nasdaq Dubai reported Dh15.7 million in losses. Earlier this month, Damas delisted from Nasdaq Dubai leaving DEPA and DP World as the only listed companies on the exchange. Yikes.

Now, critics have long since questioned the need for three different stock exchanges in the UAE. Nasdaq Dubai is one of the UAE’s three stock exchanges, including the Dubai Financial Market and the Abu Dhabi Securities Exchange-that is probably three capital markets too many for a country the size of the UAE. With Damas’ delisting and the upcoming MSCI review, the question of need is all the more pertinent. Has the time come for a unification of the UAE’s capital markets?

Of course this is politically charged and controversial question. Yet with the local capital markets underperforming for the past three years, it is one that bares consideration. Let us not forget the choice of a local health company NMC to be listed on the London Stock Exchange rather than Nasdaq Dubai—what does that tell you?

Clearly, there is a need for change. These are sensitive waters I am treading in, but if I was to up the ante, I would ask of the potential of a GCC-wide unification? So maybe I am pushing it, but at the very least standardizing the policies and regulations of GCC capital markets may be a more ‘halal’ alternative to improving the health of capital markets, especially for countries like the UAE and Qatar hoping for a precious ‘emerging markets’ upgrade.